{"id":7138,"date":"2026-06-26T09:00:00","date_gmt":"2026-06-26T09:00:00","guid":{"rendered":"https:\/\/www.simplywise.com\/blog\/?p=7138"},"modified":"2026-06-26T16:56:33","modified_gmt":"2026-06-26T16:56:33","slug":"what-is-a-bid-bond","status":"publish","type":"post","link":"https:\/\/www.simplywise.com\/blog\/what-is-a-bid-bond\/","title":{"rendered":"What Is a Bid Bond in Construction?"},"content":{"rendered":"<p><!--\nYOAST META BLOCK\nfocus_keyphrase: what is a bid bond\nyoast_title: What Is a Bid Bond in Construction? Contractor Guide\nmeta_description: What is a bid bond? A surety bond that guarantees a contractor honors a winning bid and posts the required bonds. How it works, cost, and rules.\n--><br \/>\n<script>\ndocument.addEventListener('DOMContentLoaded', function() {\n  var sels = ['.entry-header','.page-header','article > h1:first-child','.entry-footer'];\n  sels.forEach(function(s){document.querySelectorAll(s).forEach(function(el){el.style.display='none';});});\n  var el = document.querySelector('.sw-a');\n  while (el && el !== document.body) {\n    el.style.maxWidth='100%'; el.style.width='100%'; el.style.padding='0'; el.style.margin='0';\n    el.style.float='none'; el.style.flex='0 0 100%';\n    el = el.parentElement;\n  }\n  document.body.style.marginTop='0'; document.body.style.paddingTop='0';\n});\n<\/script>\n<link href=\"https:\/\/fonts.googleapis.com\/css2?family=Inter:wght@400;500;600;700;800&#038;display=swap\" rel=\"stylesheet\">\n<!-- 02 Article Template. Inline-styled, WordPress-push-ready. 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*\/\n.sw-a__eyebrow,.sw-l__eyebrow,.eyebrow{color:#1d4ed8!important;}\n<\/style>\n<p><script>\n(function(){\n  try{\n    var b=document.body;\n    if(b && b.classList){b.classList.add('single-post');}\n  }catch(e){}\n})();\n<\/script><\/p>\n<article class=\"sw-a\">\n<section class=\"sw-a__hero\">\n<div class=\"sw-a__inner\">\n<div class=\"sw-a__breadcrumb\">Blog &nbsp;&rsaquo;&nbsp; How to Estimate<\/div>\n<p>    <span class=\"sw-a__eyebrow\">Bidding &middot; Contractor Guide<\/span><\/p>\n<h1>What Is a Bid Bond in Construction?<\/h1>\n<p class=\"sw-a__subtitle\">A plain-English guide to what a bid bond is and how it works. Learn the cost and the federal rules. Sourced from the Federal Acquisition Regulation, the U.S. Small Business Administration, and the Miller Act.<\/p>\n<div class=\"sw-a__meta\">\n      <span>SimplyWise<\/span><br \/>\n      <span class=\"sw-a__dot\"><\/span><br \/>\n      <span>Updated June 8, 2026<\/span><br \/>\n      <span class=\"sw-a__dot\"><\/span><br \/>\n      <span>14 min read<\/span>\n    <\/div>\n<figure class=\"sw-a__hero-figure\">\n      <img decoding=\"async\" src=\"https:\/\/images.unsplash.com\/photo-1454165804606-c3d57bc86b40?w=1400&#038;h=700&#038;fit=crop&#038;q=80&#038;auto=format\" alt=\"Contractor reviewing a construction bid and bonding paperwork at a desk\" loading=\"eager\"><br \/>\n    <\/figure>\n<\/p><\/div>\n<\/section>\n<section class=\"sw-a__tldr\">\n<div class=\"sw-a__tldr-box\">\n<div class=\"sw-a__tldr-label\">Bid bond at a glance<\/div>\n<div class=\"sw-a__tldr-body\">\n<ol>\n<li>A bid bond is a surety bond. It guarantees a contractor will honor a winning bid and post the required performance and payment bonds.<\/li>\n<li>It protects the project owner if the low bidder walks away or cannot bond the job after the award.<\/li>\n<li>It involves three parties: the contractor (principal), the project owner (obligee), and the surety company.<\/li>\n<li>On federal jobs, a bid guarantee runs at least 20 percent of the bid price. It is capped at $3 million.<\/li>\n<li>The surety usually issues the bid bond at no charge. It earns its fee on the performance and payment bonds that follow.<\/li>\n<li>If the winning bidder backs out, the owner can collect the bond amount or the difference to the next bidder.<\/li>\n<li>Most public and many private construction jobs require a bid bond to submit a bid at all.<\/li>\n<li>Qualifying for bonding starts with clean financials, accurate estimates, and a track record of completed work.<\/li>\n<\/ol><\/div>\n<\/p><\/div>\n<\/section>\n<section class=\"sw-a__body\">\n<div class=\"sw-a__inner\">\n<h2>What is a bid bond in construction?<\/h2>\n<p>A <strong>bid bond<\/strong> is a surety bond. It guarantees a contractor will honor the bid they submitted. Because of that promise, it also commits them to follow through on a win. They must sign the contract and furnish the required performance and payment bonds. In plain terms, then, a bid bond is the bidder&#8217;s promise that the number on the bid is real. A surety company backs that promise. The Federal Acquisition Regulation defines this protection as a bid guarantee. Specifically, it is security assuring that the bidder will not withdraw the bid within the acceptance period. It also assures the bidder will execute the contract and furnish required bonds within the specified time.<\/p>\n<p>Every range, percentage, and rule below traces to a named primary source. Those sources are the <a href=\"https:\/\/www.acquisition.gov\/far\/28.001\" target=\"_blank\" rel=\"noopener\">Federal Acquisition Regulation (FAR) Part 28<\/a>, the <a href=\"https:\/\/www.sba.gov\/funding-programs\/surety-bonds\" target=\"_blank\" rel=\"noopener\">U.S. Small Business Administration Surety Bond Guarantee program<\/a>, and the <a href=\"https:\/\/www.acquisition.gov\/far\/28.102-1\" target=\"_blank\" rel=\"noopener\">Miller Act<\/a> as carried into FAR. As a result, you can verify any claim before you put a bid bond on your next public job.<\/p>\n<h3>Why a bid bond matters<\/h3>\n<p>In short, a bid bond does one job. Indeed, it makes the bidder accountable for the bid. Without it, a contractor could submit a lowball number to win, then walk away when the real costs surfaced. As a result, the owner has to re-bid the whole project. With a bid bond in place, by contrast, the owner has a financial backstop. So if the low bidder refuses to sign or cannot post the follow-on bonds, the owner can collect on the bond.<\/p>\n<p>SimplyWise built this guide for contractors who are starting to chase public work. It also helps with government contracts and larger private jobs where bonding is the price of admission. For example, the sections below walk through how a bid bond works and who the parties are. In addition, they cover what it costs, the federal thresholds, and how to qualify for bonding in the first place.<\/p>\n<h2>How a bid bond works<\/h2>\n<p>A bid bond enters the picture before any work begins, at the bidding stage. When a project owner advertises a job that requires bonding, the rules kick in. Every contractor that wants to bid must then attach a bid bond to the bid package. The contractor submits it with the sealed bid. An owner usually rejects a bid without the required bond as nonresponsive. So the bid bond is not a fee you pay to win. Instead, it is a condition of being allowed to compete at all. Once bids are opened, the owner reviews the responsive bids and selects the winner, typically the lowest qualified bidder.<\/p>\n<p>After the award, the winning contractor has a window to act. Then they sign the contract and post the required performance and payment bonds. If the contractor honors the bid, signs, and bonds the job, the bid bond simply expires. In that case, no money changes hands. The trigger comes when the winning contractor refuses to sign or cannot post the follow-on bonds. The owner can then make a claim against the surety to recover the cost of the bidder&#8217;s default. That recovery is usually the difference between the defaulting bid and the next acceptable bid. Still, it is capped at the face amount of the bond.<\/p>\n<h3>The three parties to a bid bond<\/h3>\n<p>Every surety bond, including a bid bond, has three parties. Understanding the roles is the fastest way to see what a bid bond actually does:<\/p>\n<ul>\n<li><strong>The principal<\/strong> is the contractor submitting the bid. The bond guarantees the principal&#8217;s performance.<\/li>\n<li><strong>The obligee<\/strong> is the project owner requiring the bond. The bond protects the obligee, the one who can file a claim if the bidder defaults.<\/li>\n<li><strong>The surety<\/strong> is the bonding company that issues the bond. The surety backs the contractor&#8217;s promise with its own financial strength. It pays a valid claim, then seeks reimbursement from the contractor.<\/li>\n<\/ul>\n<p>This three-party structure is the core difference between a bond and insurance. Insurance spreads risk across a pool and absorbs losses. A surety bond, by contrast, does not absorb the loss. Instead, the surety expects the contractor to repay any claim it pays. So the surety underwrites the contractor the way a bank underwrites a borrower. In fact, it weighs financial strength, experience, and capacity before issuing the bond.<\/p>\n<h3>What triggers a bid bond claim<\/h3>\n<p>Bidder default after the award triggers a claim. The two most common triggers are simple. First, the winning contractor refuses to sign the contract on the bid terms. Second, the winning contractor cannot furnish the required performance and payment bonds. In either case, the owner holds a project that has to be re-bid or awarded to a higher bidder. The owner then files a claim to recover the financial harm. That recovery is generally the difference between the defaulting bid and the next bid the owner has to accept. It is capped at the bond amount.<\/p>\n<h2>Bid bond vs performance bond vs payment bond<\/h2>\n<p>Contractors often confuse the three contract bonds because they travel together on the same job. Yet each protects a different party at a different stage. The U.S. Small Business Administration guarantees all three through its Surety Bond Guarantee program. It describes them as distinct bond types. A bid bond covers the bidding stage. Next, a performance bond covers the construction stage. Finally, a payment bond protects the people who supply labor and materials.<\/p>\n<table>\n<thead>\n<tr>\n<th scope=\"col\">Bond type<\/th>\n<th scope=\"col\">When it applies<\/th>\n<th scope=\"col\">What it guarantees<\/th>\n<th scope=\"col\">Who it protects<\/th>\n<\/tr>\n<\/thead>\n<tbody>\n<tr>\n<td>Bid bond<\/td>\n<td>At bid submission<\/td>\n<td>The bidder will honor the bid and post the required bonds if awarded<\/td>\n<td>The project owner<\/td>\n<\/tr>\n<tr>\n<td>Performance bond<\/td>\n<td>After award, during construction<\/td>\n<td>The contractor will complete the contract per the terms<\/td>\n<td>The project owner<\/td>\n<\/tr>\n<tr>\n<td>Payment bond<\/td>\n<td>After award, during construction<\/td>\n<td>Subcontractors and suppliers will be paid<\/td>\n<td>Subcontractors and material suppliers<\/td>\n<\/tr>\n<tr>\n<td>Ancillary bond<\/td>\n<td>Varies by contract<\/td>\n<td>Obligations outside performance or payment, such as maintenance<\/td>\n<td>The project owner<\/td>\n<\/tr>\n<\/tbody>\n<\/table>\n<p>The SBA notes that its program guarantees bid, performance, payment, and ancillary bonds. For example, ancillary bonds cover obligations outside performance or payment, such as a maintenance warranty period. So a single public construction contract can carry all four bond types across its life. The bid bond is the first one in the door. In most cases, it is also the only one that costs the contractor nothing up front.<\/p>\n<h2>How much does a bid bond cost?<\/h2>\n<p>For most contractors, a bid bond itself carries no premium. In fact, the SBA states plainly that it does not charge a fee for bid bond guarantees. By contrast, performance and payment bonds carry a fee of 0.6 percent of the contract price under its program. So the surety usually issues the bid bond at no charge. It earns its money on the performance and payment bonds that follow if the contractor wins. As a result, the real cost is not a premium. Instead, it is qualifying for the bonding capacity that the bid bond signals.<\/p>\n<p>This is the part new contractors miss. A surety will not issue a bid bond on its own. Rather, it must be prepared to issue the performance and payment bonds behind it. After all, the bid bond is a promise that those bonds will be posted. So the question is never just &#8220;how much is a bid bond.&#8221; The real question is whether the contractor qualifies for the full bond program. Generally, performance and payment bond premiums run as a percentage of the contract amount. They vary with the contractor&#8217;s financial strength and the size of the job.<\/p>\n<div class=\"sw-a__callout\"><strong>Estimator tip:<\/strong> The bid bond is free, but it commits you to a number. If your estimate is wrong and you win, you are bonded to deliver at the price you bid. An accurate estimate is the cheapest bonding insurance there is.<\/div>\n<h2>When is a bid bond required?<\/h2>\n<p>Bid bonds are most common on public construction work. There, statute and regulation drive the requirement. On federal projects, in particular, the rules are explicit. FAR Part 28 requires performance and payment bonds for construction contracts exceeding $150,000. That threshold carries forward from the Miller Act. Furthermore, FAR ties the bid guarantee to those bonds. A contracting officer cannot require a bid guarantee on its own. A performance bond, or a performance and payment bond, must also be required. The reverse holds too: those bonds always pull in a bid guarantee. So on a federal construction job above the Miller Act threshold, a bid bond is effectively mandatory.<\/p>\n<p>Meanwhile, state and local public projects follow similar patterns under their own &#8220;little Miller Act&#8221; statutes. Of course, thresholds and amounts vary by jurisdiction. Private owners can also require bid bonds on larger jobs. That is common on commercial and institutional work financed by lenders who want the protection. So the practical rule for a contractor is simple. If the bid documents list a bonding requirement, you cannot submit a compliant bid without the bond.<\/p>\n<h3>The federal bid guarantee amount<\/h3>\n<p>On federal work, regulation sets the bid guarantee amount. Specifically, FAR 28.101-2 states that the bid guarantee &#8220;shall be at least 20 percent of the bid price but shall not exceed $3 million.&#8221; So a contractor bidding a $2 million federal job needs a bid guarantee of at least $400,000 in face value. Even so, the cap means very large bids top out at a $3 million guarantee. FAR also notes that only separate bid guarantees are acceptable in connection with construction contracts. For that reason, the bid bond stands on its own rather than folding into another instrument.<\/p>\n<h3>Why public owners require bid bonds<\/h3>\n<p>Public owners require bid bonds because they spend public money and cannot afford a failed award. If the low bidder walks away, the owner has two bad options. For example, it re-bids the project and loses time and money. Or it awards to a higher bidder and pays more than the budget anticipated. The bid bond shifts that risk to a surety. As a result, the bid bond guards the public agency against an unserious or unqualified low bid. Only a contractor a surety will back can post a bid bond. In addition, the requirement screens out bidders who lack the financial backing to deliver.<\/p>\n<h2>How to qualify for a bid bond<\/h2>\n<p>Qualifying for a bid bond is really qualifying for a surety relationship. After all, the surety that issues your bid bond commits to bond the whole job. Its underwriting looks a lot like a bank&#8217;s. In short, the surety wants to see three things. First, you can finish the work. Second, you can pay your subs and suppliers. Third, your financial house is in order. So follow the steps below to put yourself in position.<\/p>\n<ol class=\"sw-a__steps\">\n<li>\n<h3>Build clean, current financial statements<\/h3>\n<p>The surety starts with your balance sheet and income statement. Generally, strong working capital and net worth relative to the job size are the foundation of bonding capacity. An accountant&#8217;s year-end statements carry more weight than self-prepared figures, especially as job sizes grow.<\/p>\n<\/li>\n<li>\n<h3>Document a track record of completed work<\/h3>\n<p>Sureties bond contractors who have done the work before. For example, a history of completed projects at or near the size you want to bond shows the surety you can deliver. So keep records of past contracts, completion dates, and references.<\/p>\n<\/li>\n<li>\n<h3>Show accurate, defensible estimates<\/h3>\n<p>The bid bond commits you to your bid, so the surety cares that your estimates are sound. For instance, a contractor who routinely underbids and loses money is a poor bonding risk. By contrast, accurate, well-documented estimates protect both your margin and your bondability.<\/p>\n<\/li>\n<li>\n<h3>Apply through a surety or an SBA-backed channel<\/h3>\n<p>Work with a surety agent. Cannot get bonded through standard commercial channels as a small business? Then use the SBA Surety Bond Guarantee program. The SBA guarantees a portion of the surety&#8217;s loss. As a result, sureties become willing to back contractors they would otherwise turn down.<\/p>\n<\/li>\n<li>\n<h3>Match the bond to the contract<\/h3>\n<p>First, confirm the bid documents&#8217; bonding requirements before you bid. Check the bid guarantee amount and the follow-on performance and payment bond requirements. On federal work, for example, expect a bid guarantee of at least 20 percent of the bid price. Then bring those numbers to your surety so the bond matches the job.<\/p>\n<\/li>\n<\/ol>\n<h3>The SBA Surety Bond Guarantee program<\/h3>\n<p>Small contractors who cannot get bonded commercially have a federal backstop. Specifically, the SBA Surety Bond Guarantee program guarantees bid, performance, payment, and ancillary bonds for small businesses. It shares the surety&#8217;s risk, so the surety will issue bonds it otherwise would decline. As a result, a newer or smaller contractor can build bonding capacity over time by completing bonded jobs. The program guarantees individual contracts up to $9 million. Still, the ceiling rises to $14 million for federal contracts when a contracting officer certifies the guarantee is necessary.<\/p>\n<p>The program is large and active. Indeed, according to the SBA, in fiscal year 2025 the Surety Bond Guarantee program supported $10.6 billion in total contract value. That ran through guaranteed bid and final bonds. Meanwhile, it marked a 15 percent increase over the prior year. The program also assisted more than 2,200 small businesses. Many small contractors want to break into bonded public work. For them, then, the SBA channel is a real path to the bonding capacity that a bid bond requires.<\/p>\n<h2>Where the estimate fits the bid bond<\/h2>\n<p>A bid bond is only as safe as the bid behind it. After all, the bid bond commits you to your number. So an inaccurate estimate is a direct threat to your margin and your bonding relationship. For example, win a job on a number that does not cover your real costs. You are then bonded to deliver at a loss. Indeed, a contractor who repeatedly does that becomes a poor bonding risk. The discipline of an accurate, defensible estimate is not separate from bonding. Instead, it is the foundation of it.<\/p>\n<p>This is where <a href=\"https:\/\/www.simplywise.com\/cost-estimator\/\" target=\"_blank\" rel=\"noopener\">SimplyWise Cost Estimator<\/a> earns its place in a bonded contractor&#8217;s workflow. The tool uses photo-to-estimate intelligence. It turns a job site photo into a sourced material list and labor breakdown. For interior and remodel scopes, LiDAR room scanning adds accurate measurements. The tool also produces branded PDF quotes that look professional in front of an owner or an estimator. So the number you carry into a bid rests on measured inputs and sourced costs. In short, it is not a back-of-the-envelope guess. SimplyWise also bundles receipts and expense tracking plus mileage tracking. As a result, the job-cost records a surety eventually wants to see are ready as you work.<\/p>\n<p>SimplyWise Cost Estimator is an estimating and quoting tool, not a full field-service CRM. It is <strong>free to try<\/strong>, with no credit card to start. So a contractor can build their next handful of bids on measured photo-to-estimate inputs. Then they decide whether the accuracy is worth keeping. For example, try it on the next site visit and compare the output against the way you price today. Then carry that number into the bid with confidence that it will hold.<\/p>\n<h2>Sources<\/h2>\n<ul>\n<li><a href=\"https:\/\/www.acquisition.gov\/far\/28.101-2\" target=\"_blank\" rel=\"noopener\">Federal Acquisition Regulation 28.101-2, Solicitation provision (Acquisition.gov)<\/a>: the bid guarantee &#8220;shall be at least 20 percent of the bid price but shall not exceed $3 million.&#8221;<\/li>\n<li><a href=\"https:\/\/www.acquisition.gov\/far\/28.101-1\" target=\"_blank\" rel=\"noopener\">Federal Acquisition Regulation 28.101-1, Policy on use (Acquisition.gov)<\/a>: a contracting officer shall not require a bid guarantee unless a performance bond or a performance and payment bond is also required, and bid guarantees shall be required whenever such bonds are required; only separate bid guarantees are acceptable for construction contracts.<\/li>\n<li><a href=\"https:\/\/www.acquisition.gov\/far\/28.001\" target=\"_blank\" rel=\"noopener\">Federal Acquisition Regulation 28.001, Definitions (Acquisition.gov)<\/a>: a bid guarantee assures that the bidder will not withdraw a bid within the acceptance period and will execute a written contract and furnish required bonds within the specified time.<\/li>\n<li><a href=\"https:\/\/www.acquisition.gov\/far\/28.102-1\" target=\"_blank\" rel=\"noopener\">Federal Acquisition Regulation 28.102-1, Miller Act (Acquisition.gov)<\/a>: performance and payment bonds are required for any construction contract exceeding $150,000, subject to limited waiver.<\/li>\n<li><a href=\"https:\/\/www.sba.gov\/funding-programs\/surety-bonds\" target=\"_blank\" rel=\"noopener\">U.S. Small Business Administration, Surety Bonds (sba.gov)<\/a>: defines bid, performance, payment, and ancillary bonds; states the SBA does not charge a fee for bid bond guarantees, while performance and payment bonds carry a 0.6 percent fee of the contract price; guarantees contracts up to $9 million ($14 million on certified federal contracts).<\/li>\n<li><a href=\"https:\/\/www.sba.gov\/article\/2026\/01\/13\/growth-demand-manufacturing-drives-record-surety-bond-guarantees-fy25\" target=\"_blank\" rel=\"noopener\">U.S. Small Business Administration, Record Surety Bond Guarantees in FY25 (sba.gov)<\/a>: the program supported $10.6 billion in total contract value in fiscal year 2025, a 15 percent increase over the prior year, assisting more than 2,200 small businesses.<\/li>\n<\/ul><\/div>\n<\/section>\n<section class=\"sw-a__pull\">\n<blockquote><p>\n    A bid bond is free to post and expensive to break. It costs nothing until the day you win a job and walk away. Then it costs you the surety relationship that lets you bid the next one.\n  <\/p><\/blockquote>\n<p>  <cite>SimplyWise Editorial<\/cite><br \/>\n<\/section>\n<section class=\"sw-a__faq\">\n<h2>Frequently asked questions about bid bonds<\/h2>\n<div class=\"sw-a__faq-list\">\n<h3 class=\"sw-a__faq-cat\">Bid bond basics<\/h3>\n<details>\n<summary>What is a bid bond in simple terms?<\/summary>\n<div class=\"sw-a__faq-answer\">\n<p>A bid bond is a surety bond. It guarantees a contractor will honor the bid they submitted. The same promise commits the contractor to sign the contract and post the required performance and payment bonds if they win. So the bond protects the project owner. If the low bidder refuses to sign or cannot bond the job, then the owner can collect on the bid bond. That covers the cost of re-bidding or awarding to the next bidder. In short, the bond has three parties: the contractor (principal), the owner (obligee), and the surety company that backs the promise.<\/p>\n<\/p><\/div>\n<\/details>\n<details>\n<summary>How much does a bid bond cost?<\/summary>\n<div class=\"sw-a__faq-answer\">\n<p>For most contractors a bid bond carries no premium. In fact, the U.S. Small Business Administration states it does not charge a fee for bid bond guarantees. By contrast, performance and payment bonds under its program carry a fee of 0.6 percent of the contract price. So the surety usually issues the bid bond at no charge. It earns its money on the performance and payment bonds that follow if the contractor wins. As a result, the real cost is qualifying for the bonding capacity the bid bond signals.<\/p>\n<\/p><\/div>\n<\/details>\n<h3 class=\"sw-a__faq-cat\">Rules and amounts<\/h3>\n<details>\n<summary>How much is a bid bond on a federal job?<\/summary>\n<div class=\"sw-a__faq-answer\">\n<p>On federal construction work, the Federal Acquisition Regulation sets the bid guarantee at &#8220;at least 20 percent of the bid price but shall not exceed $3 million.&#8221; So a contractor bidding a $2 million federal job needs a bid guarantee of at least $400,000 in face value. Even so, very large bids cap at a $3 million guarantee. In addition, FAR requires that only separate bid guarantees are acceptable for construction contracts.<\/p>\n<\/p><\/div>\n<\/details>\n<details>\n<summary>When is a bid bond required?<\/summary>\n<div class=\"sw-a__faq-answer\">\n<p>Bid bonds are most common on public construction. On federal jobs, FAR Part 28 requires performance and payment bonds for construction contracts exceeding $150,000. That carries forward the Miller Act threshold. Furthermore, FAR ties the bid guarantee to those bonds. A bid guarantee is required whenever a performance or performance and payment bond is required. Meanwhile, state and local agencies follow similar &#8220;little Miller Act&#8221; rules with their own thresholds. Private owners can also require bid bonds on larger commercial jobs. So if the bid documents list a bonding requirement, you cannot submit a compliant bid without the bond.<\/p>\n<\/p><\/div>\n<\/details>\n<h3 class=\"sw-a__faq-cat\">Bond types and qualifying<\/h3>\n<details>\n<summary>What is the difference between a bid bond and a performance bond?<\/summary>\n<div class=\"sw-a__faq-answer\">\n<p>A bid bond covers the bidding stage. It guarantees the bidder will honor the bid and post the required bonds if awarded. So it protects the owner against a low bidder who walks away. By contrast, a performance bond covers the construction stage. It guarantees the contractor will complete the contract per the terms. Still, the two travel together on the same job. After all, the bid bond is the promise that the performance bond (and payment bond) will be posted after the award. Finally, a payment bond is a third bond that protects subcontractors and suppliers.<\/p>\n<\/p><\/div>\n<\/details>\n<details>\n<summary>How do you qualify for a bid bond?<\/summary>\n<div class=\"sw-a__faq-answer\">\n<p>Qualifying for a bid bond means qualifying for a surety relationship. After all, the surety issuing the bid bond commits to bond the whole job. Indeed, sureties underwrite like a bank. They want clean, current financial statements and strong working capital. They also want a track record of completed work at similar size. And they want accurate estimates that show you bid jobs profitably. Meanwhile, small businesses that cannot get bonded commercially can use the SBA Surety Bond Guarantee program. It guarantees bid, performance, and payment bonds on contracts up to $9 million ($14 million on certified federal contracts).<\/p>\n<\/p><\/div>\n<\/details><\/div>\n<\/section>\n<section class=\"sw-a__finalcta\">\n  <span class=\"sw-a__eyebrow\">Bid with confidence<\/span><\/p>\n<h2>Carry an accurate number into every bonded bid.<\/h2>\n<p>A bid bond commits you to your number. SimplyWise Cost Estimator turns a job site photo into a sourced material list and labor breakdown. It adds LiDAR room scanning and produces branded PDF quotes. Free to try.<\/p>\n<div class=\"sw-a__cta-buttons\">\n    <a class=\"sw-a__btn\" href=\"https:\/\/swcostestimator.app.link\/ce-ai\" target=\"_blank\" rel=\"noopener\">Try SimplyWise Cost Estimator, free<\/a><\/p>\n<\/div>\n<\/section>\n<\/article>\n<p><script type=\"application\/ld+json\">\n{\n  \"@context\": \"https:\/\/schema.org\",\n  \"@type\": \"Article\",\n  \"headline\": \"What Is a Bid Bond in Construction?\",\n  \"description\": \"What is a bid bond? A surety bond that guarantees a contractor will honor a winning bid and post the required bonds. How it works, cost, and federal rules.\",\n  \"author\": {\"@type\": \"Organization\", \"name\": \"SimplyWise\"},\n  \"publisher\": {\"@type\": \"Organization\", \"name\": \"SimplyWise\", \"logo\": {\"@type\": \"ImageObject\", \"url\": \"https:\/\/simplywise.com\/logo.png\"}},\n  \"datePublished\": \"2026-06-08\",\n  \"dateModified\": \"2026-06-08\",\n  \"image\": \"https:\/\/images.unsplash.com\/photo-1454165804606-c3d57bc86b40?w=1400&h=700&fit=crop&q=80&auto=format\"\n}\n<\/script><\/p>\n<p><script type=\"application\/ld+json\">\n{\n  \"@context\": \"https:\/\/schema.org\",\n  \"@type\": \"FAQPage\",\n  \"mainEntity\": [\n    {\"@type\": \"Question\", \"name\": \"What is a bid bond in simple terms?\", \"acceptedAnswer\": {\"@type\": \"Answer\", \"text\": \"A bid bond is a surety bond that guarantees a contractor will honor the bid they submitted and will sign the contract and post the required performance and payment bonds if they win. It protects the project owner: if the low bidder refuses to sign or cannot bond the job, the owner can collect on the bid bond to cover the cost of re-bidding or awarding to the next bidder. The bond has three parties: the contractor (principal), the owner (obligee), and the surety company that backs the promise.\"}},\n    {\"@type\": \"Question\", \"name\": \"How much does a bid bond cost?\", \"acceptedAnswer\": {\"@type\": \"Answer\", \"text\": \"For most contractors a bid bond carries no premium. The U.S. Small Business Administration states it does not charge a fee for bid bond guarantees, while performance and payment bonds under its program carry a fee of 0.6 percent of the contract price. 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A plain-English guide to what a bid bond is and how it works. Learn the cost and the federal rules. Sourced from the Federal Acquisition Regulation, the U.S. Small Business Administration, and the Miller Act. SimplyWise Updated June 8, [&hellip;]<\/p>\n","protected":false},"author":12,"featured_media":0,"comment_status":"closed","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"_yoast_wpseo_focuskw":"bid bond","_yoast_wpseo_title":"What Is a Bid Bond in Construction? Contractor Guide","_yoast_wpseo_metadesc":"What is a bid bond? A surety bond that guarantees a contractor honors a winning bid and posts the required bonds. How it works, cost, and rules.","_yoast_wpseo_linkdex":"78","_yoast_wpseo_content_score":"90","inline_featured_image":false,"footnotes":""},"categories":[181],"tags":[],"class_list":["post-7138","post","type-post","status-publish","format-standard","hentry","category-how-to-estimate"],"yoast_head":"<!-- This site is optimized with the Yoast SEO plugin v21.2 - https:\/\/yoast.com\/wordpress\/plugins\/seo\/ -->\n<title>What Is a Bid Bond in Construction? Contractor Guide<\/title>\n<meta name=\"description\" content=\"What is a bid bond? A surety bond that guarantees a contractor honors a winning bid and posts the required bonds. 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